The Sustainable Economic Welfare Index (ISEW) is an economic indicator intended to replace Gross Domestic Product, which is the main macroeconomic indicator of the National Account System (SNA). Rather than simply adding all expenditures such as gross domestic product, consumer spending is offset by factors such as the distribution of revenues and costs associated with pollution and other unsustainable costs. This is similar to the Original Progress Indicator (GPI).
The Sustainable Economic Indicators Index (ISEW) is roughly defined by the following formula.
ISEW = private consumption
  public non-defensive spending
- personal defense expenditure
  capital formation
  services of domestic workers Site - environmental degradation costs
- depreciation of natural capital
Video Index of Sustainable Economic Welfare
History
GDP is misleading as an indicator or even as a proxy of the welfare of a nation, let alone as a measure of people's welfare, although economic policymakers generally think otherwise. This problem has become clear in practical economic policy in most industrialized countries in the early 1970s. The most notable example of this development is the MEW index developed by William Nordhaus and James Tobin in their Economic Welfare Measurement (MEW) them in 1972, Net National Japan (NNW) indicator in 1973, Welfare Economic Aspect Index (EAW)) index Zolatas in 1981, ISEW indicators Daly and Cobb in 1989 and the UN human development index, or HDI, in 1990. They are all based on the neoclassical welfare economy and used as the starting point of the National Accounts System (SNA). The basic idea behind all these approaches is the entry of non-market commodities, positive and negative, to produce aggregate macroindicators in monetary terms.
The EAW index, applied to the United States for the period 1950-1977, shows that the economic aspect of social welfare is a diminished function of economic growth in a mature and prosperous industrial society. The percentage increase in social welfare over time is smaller than the increase in GDP, and is decreasing. When the elasticity of EAW/GDP ratio reaches zero, economic welfare will reach its maximum value. Beyond that point, any further increase in GDP will lead to an absolute decline in economic well-being.
ISEW was originally developed in 1989 by leading ecological economist and steady-state theorist Herman Daly and theologian John B. Cobb, but later they went on to add some other "fees" to the ISEW definition. This work then produces another macroeconomic indicator, the Original Progress Indicator (GPI): see the measurement of sustainability. GPI is an extension of the ISEW which emphasizes real and tangible progress of the community and seeks primarily to monitor the welfare and sustainability of economic ecology. ISEW and GPI summarize economic welfare by using single numbers according to the same logic in which GDP summarizes the economic outputs into a single digit. In addition to economic issues, social and environmental issues in monetary terms are also included.
Maps Index of Sustainable Economic Welfare
ISEW trends in the United States
The ISEW calculations in the United States from 1950 to 1986 were conducted by Cobb and Daly in 1989. The results revealed that the increase in the average economic welfare of Americans had stabilized after the 1970s although economic growth, measured by GDP, has continued to grow. According to Cobb and Daly's calculations, the external effects of production and income distribution inequality are the main reasons for this development where increased production does not necessarily lead to increased welfare.
Other countries to adopt ISEW
In addition to the US, at least seven other countries or regions have tried to implement ISEW, namely England (Jackson & Marks 1994), Germany (Diefenbacher 1994), Netherlands (Rosenberg & Oegema 1995), Austria (Stockhammer et al. 1995) , British Columbia (Gustavson & Lonergan 1994), Sweden (Jackson & Stymne 1996), Chile (Castaneda 1999) and Finland (Hoffrà © n 2001).
Finland ISEW Progress
The ISEW calculation for Finland has been performed by Dr. Jukka HoffrÃÆ' Â © n in Statistics Finland in 2001 [1]. Today the covered time period is extended for the year from 1945 to 2010. According to the results of sustainable economic welfare increased steadily in the 1970s and early 1980s, but has since declined and stabilized. One of the underlying reasons for this development is an effective income distribution that equitably divides the welfare derived from increased production. In the mid-1980s, income disparities began to grow again, capital flows (investment) abroad increased and environmental hazards increased, resulting in a decline in weighted personal consumption.
Top contributors to ISEW Finland in 2000 (FIM billion, rp)
Weighted personal consumption 467.8
Household work 82.8
Other positive contributions are 21.7
Long term environmental damage - 228.0
Environmental damage - 192.5
ISEW 151.8
See also
Index
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References
- Daly, H. & amp; Cobb, J. (1989), For the Common Good. Beacon Press, Boston.
- Delang, C.O. and Yu, Y.H. (2015) "Measuring Prosperity Excluding Economy: Progress of Original Hong Kong and Singapore" London: Routledge, 256 pages
- Diefenbacher, H. (1994) "Sustainable Economic Welfare Index in Germany", in C. Cobb & amp; J. Cobb (eds.), The Green National Product , University of Americas Press
- Hamilton C. (1999) "Indigenous Progress Indicator: Methodological and Results Development from Australia", Ecological Economy , vol. 30, pp.Ã, 13-28
- HoffrÃÆ' Â © n J. (2001) "Measuring the Eko-efficiency of the Welfare Generation in the National Economy, the Finnish Case." Statistics Finland. Research Report 233. Helsinki. pp.Ã, 107-109.
- Jackson, T., Marks, N., Ralls, S., Strymne, S (1997) "Sustainable Economic Welfare Index for UK 1950-1996", Environmental Strategy Center, University of Surrey, Guildford
- Jackson, T. Marks, N. (2002) "Measuring Progress", a new economic foundation and Friends of the Earth, London
- Jackson, T., McBride, N., Marks N., Abdallah, S. (2006-2007) "Measuring Regional Progress: Developing Regional Indices of Sustainable Economic Welfare for the British Territory", a new economic foundation, London
- Nordhaus, W. and Tobin, J. (1972) Is growth obsolete? Columbia University Press, New York
External links
- Friends of the Earth: Measuring progress
Source of the article : Wikipedia
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